Outlook 2007 - Unable to use FROM address for sending emails

Using Outlook 2007, connecting to an Exchange 2003 server (sp2).
For account management with a third party need to use the FROM : address functionality within outlook.
I can add the FROM address under the FROM ADDRESS in a new message but whenever an email is sent using this the following error message is returned and the email is not sent.

The following recipient(s) cannot be reached:

Paul Smith on 31/10/2013 15:36
You do not have permission to send to this recipient. For assistance, contact your system administrator.
MSEXCH:MSExchangeIS:/DC=condoso/DC=uk/DC=condoso:condoso-EXCH-01

I am guessing its a AD/Exchange persmisions issue but not sure what setting is needed where ?